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You are planning to form a portfolio with two securities, the details of which are as follows:

Security Expected Return Standard Deviation
1 12% 4%
2 10% 3%

Assume that the returns on these two securities are perfectly negatively correlated. find out portfolio expected return and variance for different combinations of these two securities and draw the efficient frontier. If you require an expected return of 11%, find out the standard deviation of your portfolio.

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M926209

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